Fresh News

Thursday, 22 July 2021

Prime Minister Florin Cîțu participated in the "Grand Matinal Digital," event, organized online by the French Chamber of Commerce, Industry and Agriculture in Romania

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Florin Cîțu: Good morning and thank you for the invitation! I will start with a brief message. You said very important things and I would like to say in one phrase what this government is about. This government is about reform and investment, with a medium-term development plan. That sums up everything we want to do while in office, this government started very well, and has a horizon over 2024. Now, we are preparing a development plan for Romania until 2028. Things are very simple from this point of view. You mentioned the amount of 76.2 billion euros. This money is for the interval 2022- 2027. Therefore, any plan we devise, we need to take into account this programming. This is why I see a development plan for this period.

I said reform and investment because Romania has to move to the next level. You talked about direct investment in Romania and what we could do to change the paradigm. In my opinion, things are very simple: we are moving to a model of economic development in which jobs, for example, are well-paid, and Romania's attractiveness will no longer be with cheap labour for types of work that had no added value. We change things, we move to well–paid jobs for investment that bring great added value.

In order to be globally competitive, the economy must move towards areas with high added value and high-profit margins, which means skilled labour. We are preparing the ground in Romania for that as well. We will qualify the workforce through state resources, of course, we will do it in partnership with private sector investors.

Romania has a unique opportunity in the next period. It is the amount of 76.2 million euros, 29.2 billion euros of which are from PNRR and the rest from European funds. At the same time, it is a firm commitment of this Cabinet - and I assure you through PNRR, this will be in the future too, towards investing at least 13 billion euros per year from the budget in the economy, you mentioned 60 billion lei, whereas I mentioned it in euro. If we look at 2028, almost 170 billion euros or more than 150 billion euros will be invested in the economy. I want us to look at this figure through what means GDP in Romania today, a GDP of 200 billion euros. So, we will invest in Romania, in the next period, a value close to Romania's GDP at present. This means, first of all, challenges in terms of the labour force, challenges related to the way in which this money is earmarked in the economy, to avoid periods when we cannot invest the money. Because we are in a discussion with the private sector, I would like to tell you a few things from PNRR that might interest you; you know very well, there are over 2 billion euros, money that addresses directly the private sector, so money that can go to the private sector and that is related to digitalization. At the same time, the message is very simple: the over 150 billion euros is money managed by the Romanian state, it invests this money in the economy, but the Romanian state cannot invest without private sector companies, so the vehicle is the Romanian state, it's true, for all the 150 billion euros, but we will make these investments in the economy with companies in the private sector, companies in the field of digitalization, companies in the field of green energy, construction companies. Therefore, not only 2 billion euros from PNRR pertain to the private sector, all the 150 billion euros that come to the economy will go through the private sector. For each project, you need a company on the other side that, of course, will win a contract with a tender that comes from the private sector and will implement these resources in the economy.

That's right, these are things we already know. At the same time, we are fighting internationally for investment. We want more capital, more investments in Romania in addition to these European funds and PNRR and money invested from the budget and, for that, and we are doing certain things. As I said, we look at what has been done wrong so far, why investors did not come to Romania until the present and why investors avoided our country. On the one hand, it is true that the legislation in Romania was not, I would not say friendly, but it was not as clear as necessary and it was easily interpretable and we are working on this legislation, including public procurement legislation. It is part of the reform package we have announced. At the same time, I look at the global competitiveness indicators for Romania. It is the simplest thing, where we can get ideas to reform the economy. There, Romania is worst at authorizing and approving investments. After you have made an investment in Romania, you open a company in three days, four days, but to kick off investment, it can take up to a year, a year and a half. We will reduce all these terms through legislation, in order to make the economic environment much friendlier for foreign investors in Romania. We still maintain the aid schemes and I think the only aid scheme that works is scheme 807 drawn up by the Ministry of Finance, which worked very well for investments of over 1 million euros and there are a few such things, but the direction we are already heading to, produced results. In the first quarter of this year, economic growth was for the first time entirely due to investment. The 2.8 percentage points of economic growth are entirely due to investments. Even public administration consumption fell in the first part of the year, which is all right, allowed the private sector to make investments. We are talking about net investments in the economy, which have grown. The paradigm shift, not to go into details, was clear at the beginning of the mandate, when I said that we will move from a budget that was built on social spending mostly, to a budget that will have more and more investment component, and the two programs, PNRR and European funds, are used to relieve the budget of certain expenditure and to allow the national budget to make investments, to make investment expenditure and other expenditure.

This is the direction we are heading to, it is a government that - I said from the first moment - is close to the private sector and that understands that development comes only through a transparent, trusting relationship with the private sector. The things we said at the beginning of our mandate, remain as we said them and we have always maintained them in front of our discussion partners, with the European Commission, regarding taxes, for example. I do not want us to introduce new taxes in Romania, I do not want to increase the existing taxes. The only parenthesis here is that if decisions on pollution taxes come from the European Commission and so on, we can talk about directives there. Otherwise, as far as I am concerned, this government will not try to increase revenues by penalizing investors and citizens in the private sector. On the contrary, we will increase and we have shown that we will increase budget revenues through voluntary compliance. When you are a reliable and transparent partner of the private sector, budget revenues increase following voluntary compliance. Things are simple from my point of view. I stop in order to have a debate. This was the message that I wanted to convey. We very much appreciate the Romanian –French partnership regarding economic development and the support extended for Romania to be invited to join the OECD. Thank you!

***

Florin Cîțu: Thank you very much for the presentations and comments. You correctly identified our problems, or the challenges for this government, to reach where we said, a competitive economy, with well-paid jobs and great added-value production. This is in fact the objective.

We have several goals at the moment. On the one hand, we want to create a competitive economy and, on the other hand, we committed together with our partners in the European Union to move towards a green economy, to be not only competitive but also green. In the short term, the two may not be very easy to implement. The objectives, although common, the one regarding green energy, with the European Union, the strategy to switch to a green economy is different from country to country. Romania will do its best in the next period, in terms of green energy, but we have to be realistic and see exactly where Romania stands today. We are a competitive and clean economy, but the transition has a cost. And this is our point of view: the speed of making this transition will be different for Romania, compared to other countries and, at the same time, of course, we need more support from our European partners, if we want to increase our speed. We are making big efforts regarding the transition from polluting energy for instance, in Valea Jiului to green energy, but here, discussions with partners from the European Commission, are very clear from my point of view. Speed depends on the way we are doing this.

We must think there is a social cost that we cannot throw on the citizens at the moment. We must think of measures to help people go further, investment opportunities. I would like to talk a bit about the way we are seeing things. We are talking, on the one hand, more about creating an offer of human capital, and at the same time, about creating opportunities. I would start with the final part, how we see legislative documents to make the connection between labour legislation, education, investment, and so on.

All should have a single objective, from my point of view: creating opportunities for Romanians. Opportunities in the Jiu Valley, in Moldavia, or in southern Romania, everywhere we must create the legal framework through which the labour force can move flexibly between sectors and be able to retrain very quickly. Therefore, once again, we will have inter-ministerial committees. Solutions, as happened last year, came every time after we had debates with our private sector partners. Even if we came with an idea, with some solutions, they have been immediately improved after talks with you. Thus, I am open to this. A red thread between these topics is human capital. You cannot have development without human capital to support this development.

We are talking about digital transformation; after all, you still need qualified human capital. And there are two problems: one short-term, quantitative problem related to where we take the workforce to support short-term economic growth and the second is a medium to long term problem of quality, and here we have 'Educated Romania'. 'Educated Romania' is a project that will yield results in about 15-20 years of reform, we will not see them today, but it is important to take up these reforms. And I think there is a need for continued pressure from the private sector for these reforms to be backed. There is a need for you to maintain this voice, and ask this reform publicly in the next years, so that any future Cabinet do not move away from these objectives, this is why I included the reforms in PNRR, to make sure that any government would come to power after 2028, should be, we will stay in office until 2026, but we want to make sure that these reforms will be made in the future. This predictability is needed, and we ensure this when we include reforms in the legislative documents. Returning to competencies, as it was mentioned regarding industrial policy, it is true that research, we will see how research develops in the next period, the principle of competitiveness should be introduced for resources in all sectors in the economy, including in research. Those who want to do research should compete for resources if these resources come from the state or the private sector, and only those achieving results, can go further. Funding only for the sake of funding from the budget is not a solution in my opinion, although we call it "research".

We need to find those centres where development can be done through research and there, I repeat, depending on the results, we can earmark more resources. I am not adept of investing public money anywhere, just because it is called research and we have to invest in research without results. I don't want to invest in education without results either, nor do I want to invest in health without results. We all need to ask the Government that these investments from public money be seen in the results. And this is, again, a paradigm shift. The dual education system is very good and I support it and here we have very good examples from the private sector. The private sector has done a very good job in recent years and in the discussions we had with the Minister of Education we are learning from the private sector and we will extend the good examples to the whole sector. But here too, again, we must do this in collaboration with the private sector. The tendency is that when the state takes over a program to make it much too big and we don't need everything it produces, that's why we have to stay in touch every time, as we did until now.

The fact that we managed to get through this crisis together last year was due to the way we worked, starting with SME Invest, the measures of technical unemployment, kurzarbeit and so on, flexible work schedule, all were improved after discussions with you, even if we put forward the solutions. And last but not least, regarding the agriculture part – there is a national strategy for it to follow exactly the same direction as the rest of the economy - high value-added production.

After all, after this meeting, I have a meeting with Agrostar, just to talk to those people, with the producers, with the people who create the offer and I have some very important questions for them, for example, to explain the situation that the producers complain that product prices are too low and consumers, on the other hand, complain that prices are too high.

Somewhere, something is happening between the two, somewhere a monopoly appears and we have to destroy that monopoly and I will have such discussions. The fact that we look at the medium-term and identify the problems is already an important step. It takes you all the time to tell us that we still haven't done what we were supposed to do and that we're wasting time. This - you know how it is - a wake-up call, every time you tell us that we promised something and we didn't do it, we have to understand that we do it because we have a common goal: to develop Romania or to lead Romania in 2028 where we set it out to be. And I'm proposing something that hasn't happened in the last 30 years. So, in the last 30 years, Romania has been with a GDP per capita at the tail end of Europe. I intend us to stop being at the tail end of Europe by 2028, in terms of GDP per capita, to be there, somewhere, higher in the ranking. These are goals that we must assume, we can only achieve them by coping with all these challenges that you have mentioned in all these sectors, starting from green energy, which is a commitment that we all have, to a competitive industry, and we have seen clearly what the dependence on production in China means and so on, in certain times of crisis and in order to be resilient, we need to change the paradigm. As for agriculture, which is important, you said, almost 5% of GDP in Romania and last year, a year of drought, we lost almost 10% of GDP in the third quarter. Without human resources, I repeat, even in the age of digitalization, without quality human resources, you cannot move forward, you have no way forward. That's what I wanted to tell you now. But only together you should know that we can make things advance and we need to maintain this dialogue in the next period because only from this dialogue with the private sector,  I say that all Romanians have something to gain, not just the private sector. Thank you!



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